Quote from @Sydney Scherer: I would certainly accept her offer, but she shouldn't pay for complete replacement.

I'd check your state rules on accepting a full rent payment after notice to non-renew has occurred.

I told the contractor who has accepted responsibility and said he will not pay such an absurd amount and that he will talk to the neighbor.

Are you wanting to lever to achieve a greater expected return or because you can't accept that loss?

Clearly at the time the land was divided and sold, it was considered acceptable to building houses on this size lots, even with septic.

Hey River,Thanks for getting back to me, just accepted the DM, let's talk more

Is there an acceptable max percentage to increase rent? 

My realtor and her manager said “No, I am not aware of this being an acceptable means to unilaterally change the terms of the lease.

This will define for us what size of land we will be targeting, what unit compilation we are looking at doing which helps define some of our cost outlay and we will have an idea of market pricing capacity so from this we can formulate a generalized range of acceptable site development costs which then empowers us to know; what kind of land are we looking for, in what area, what's an acceptable price range to delve further...... 

(Feel free to kick me $500, but I wouldn’t accept it anyway.